The fuel economy of a hybrid electric vehicle (HEV) is improved, by taking the energy relevant system states into account in the energy management system (EMS). With an increasing number of states and decision variables, energy optimizing algorithms in the EMS can be prohibitive for real-time implementation. In part I of this work, a model-based, multi-level approach is taken to subdivide the original (large) optimization problem into computational efficient sub-problems, based on optimal control techniques using a preview. The resulting EMS solves the problem of power-split between engine and motor/generator, mode and gear switching including switching costs, with battery energy constraints. The superior energy efficiency of the multi-level EMS is simulated on a representative heavy duty drive cycle, where it saves 7.0% fuel, compared to a conventional vehicle, where the baseline EMS for the HEV saves 5.8%. In part II, real-world validation of the EMS is performed.